Great Refinance Boom

Are we in the 3rd inning, the 5th inning, or the 9th inning of the game we call the Great Refinance Boom?

That’s the trillion dollar question. The answer, as you might already have guessed, is far from easy and therefore no one truly knows for sure. BUT...what we do know is that we’re much closer to the 9th inning then the 1st. How do we know that? Simple math and here’s how:

You take a conservative look at how many potential homeowners there are out there who have at least a 75 basis point incentive to refinance their home (i.e. their current rate would drop by at least 75 basis point from where it currently is). Layer that on top of people whose credit score would make them eligible for a refi. As of today that still adds up to quite a few. How many? Well according to our friends at Black Knight, there are “16.7 million refinance candidates who could save an aggregate of $5.1 billion per month if everyone took advantage of today’s rates. That works out to an average of $305/-month per homeowner. Some 3.8 million are in the position to save $400 or more per month.”

Nice! That is a lot. However the industry and everyone in it is practically killing themselves to rip through these loans as quickly as possible. So that huge bucket shrinks each month. If you take the amount of refinance loans the industry is current pumping out each month, and divided that by the OPB of the 16.7 million homeowners left, you’ll see that at our current pace we’ll run out of refi candidates in a year. Maybe less if productive capacity of the industry increase, or Heaven forbid, rates actually go higher.

The lessons embedded in this data? For those who feel like this market will last forever...it can’t. For those who think it’ll be raining loans for the rest of your life...it won’t. For those who thought that relationship building with referral partners didn’t matter anymore...it matters more than you know. And for those who feel they don’t need to hone new skills to maintain what you’ve built after the refi wave is over...you do. And now is the time to dig in while Fortune still smiles upon us.